The COVID-19 pandemic brought many economies down to the knees around the world. The massive public health crisis and the fear of virus spread have stopped the world. Unlike every industry, the cannabis market also felt the heat of the pandemic. And amid the confusion of ‘new health norms’ and ‘corona economy,’ the market is unstable as ever.
Coronavirus tossed the cannabis market higher than ever:
On the brighter side, the cannabis market ignited the flame of revolution in the past few months. The demand for cannabis derivatives skyrocketed in the initial weeks of government-mandated lock-downs. According to the New Frontier Data, cannabis spending in the United States increased by 20% for various cannabis products categories.
Europe also saw a similar spike, based on an exclusive report by EMCDDA—the estimated value of cannabis products sold by Cannazon, between January and March, reached approximately 5.2 million Euros. Cannabis e-commerce platform Jane Technologies reported store revenue is up by 52% to 130%. Online ordering of products has increased by 142% in March.
According to Headset, a cannabis analytics firm, beverages and edibles are popular among the customers and have significant sales. There are considerable sales seen in auto flower cannabis seeds. As everyone loves these autoflowering seeds—they are easy to grow and manage in the backyard.
Panic buying helped the cannabis industry:
The reason behind the drastic spending was the public mindset of panic buying of hash products. Thinking there will be long-term stay-at-home quarantine orders. Most of the consumers saw cannabis as essential goods, besides groceries and alcohol. People reached out to cannabis products as an aid to relieve stress, anxiety, and insomnia. We saw the same pattern in medical marijuana sales. Like many patients, depending on the flower, they were seen stockpiling as much as they can.
Another driving force behind the massive sales of cannabis products is “larger customer basket size”. Customers are visiting shops less often but buying in larger quantities of goods. They are also ordering online, where the nature of online shopping leads to extra buying.
Legal cannabis business expanded:
The coronavirus crisis has been an advantage for legal cannabis businesses. Many people now are looking at cannabis from a health safe perspective. Official dispensaries follow safety laws and hygiene to curb the spread of the virus. Consumers know the products in dispensaries are safe and tested. Customers were willing to pay more for such quality of the quantity.
Many businesses suffered an indefinite loss:
On the other side, the cannabis industry has suffered an indefinite loss in some areas where businesses depend on the tourists for sales. Headset reported that business in Clark County suffered losses, as most customers are tourists from Las Vegas. With no visitors, they have now shut the businesses.
There are additional health concerns surrounding smoking marijuana and its relation to coronavirus. Regular smokers have withdrawn from smoking and are looking for safer options. Consumers avoid sharing joints or even smoking pot etc. as it may make a person vulnerable to the virus. These concerns have become catalysts and are forcing new reforms in the cannabis industry.
For some cash-run, cannabis businesses are on the ‘verge of extinction’ stated by Marijuana Business Daily. The analysis framed by tracking 33 cannabis firms observing their cash operations and expenditure showed that some firms didn’t have enough reserves to survive the next ten months.
The pre-COVID situation on cannabis was already worse:
Before the pandemic, cannabis stocks were already trailing behind, and the early boom had ended. Many businesses were failing to attract investments even after medical cannabis was legalized. The Bloomberg Intelligence Global Cannabis Competitive Peers Index fell over 50% and lost two-thirds of its value only a year ago.
The future of the cannabis industry looks very unpredictable. Looking at the aftermath of the coronavirus pandemic. Andrew DeAngelo of Colorado Hemp Company states that businesses “need to survive.” The whole cannabis industry needs to have a survival game plan, hold on to fresh opportunities, and watch out for what happens next.